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It has happened before, and when it did oil bears said told you so. And then it rose back up again. Brent Crude oil has fallen below $98 for the first time since last July. At the time of writing, US Sweet crude oil is at $86.57, the lowest level since last November.

The reasons for the fall are not obvious. Economic pessimists have been predicting falls in the price of oil for some time, and the economic news has not been so good of late. Notwithstanding falls of the last few days, the markets have been pretty euphoric of late, and, rightly or wrongly, many have invested a good deal of hope in Japan’s new QE friendly regime.

Capital Economics, long time oil bear, has already started factoring the effect of recent falls in the oil price on the Russian economy. After Saudi Arabia, these days Russia is the second biggest oil exporter in the world. Oil accounts for no less than 60 per cent of Russian exports, and around 50 per cent of government tax receipts.

Capital Economics calculates that, roughly speaking, for every $1 per barrel change in the price of Brent oil, Russia gains or loses – depending on which way the oil price moves – $2 billion worth of exports. But Neil Shearing, Chief Emerging Markets Economist at Capital Economics, said: “Prices would need to fall much further to pose a threat to economic stability (and fiscal sustainability) in Russia. We would only become concerned if oil fell below $80pb for a prolonged period.”

Okay, so that’s Brent, which – as was said above – is trading at just under $98 right now.

Looking at US crude, for which Investment and Businesses News has data going back many years, the story is as follows.

Over the last few years, oil has traded in a range between $80 and $110. The last time US Sweet crude was over $110 was in 2008. The last time it was under $80 was in 2011. The last time it was under $70 was June 2009.

In other words the current price of oil is nothing unusual. It is merely at the lower end of a range it has fluctuated within for some time.

In contrast, 2009 saw US Sweet crude fall to less than $40, and the global economy saw a reasonably strong pick-up soon afterwards.

We would need to see much stronger falls than we have seen over the last few weeks to start concluding that – thanks to the falling price of oil – the global economy is set to see a major impetus for growth, and that recessionary risk may return for Russia.

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